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Multinational Businesses Avoiding UK Taxes

The Public Accounts Committee (PAC) is made up of MPs (Members of Parliament). The PAC are putting pressure on the government to change laws which allow businesses to avoid paying taxes. They want more aggressive laws to stop large multinational companies from avoiding paying tax.

The three large companies are Google, Starbucks and Amazon, who whilst reporting large profits in the UK paid little to no tax. Facebook and eBay are other companies who are reportedly avoiding paying taxes in the UK.

The companies are not breaking the law. The companies work within current tax laws using legal loopholes to lower their taxes; however, there is discussion about how ethical it is when the British economy is struggling.

Multinational businesses have opportunities that smaller businesses don't because they can move profits between international branches, favouring countries with the lowest tax rates.

Amazon has offices in Luxembourg, which it uses to process its British profits.

Starbucks processes British profits through tax laws in the Netherlands.

The British Treasury has responded to the concerns of the PAC by pledging 77 million pounds to fight tax avoidance.

Multinational businesses are avoiding paying UK taxes by moving money between international branches in countries where there are lower taxes.

Should laws be stricter to stop multinational companies from avoiding paying taxes? Why? Do you have any suggestions for laws that might help this problem? Reply in the comments box or make your own Concept Cast!

Read this BBC article to find out more about how multinational companies avoid paying UK taxes.

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